Current Status Bill Number:3959 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19970410 Primary Sponsor:Cato All Sponsors:Cato Drafted Document Number:bbm\9338jm.97 Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Reinsurance Facility Board, motor vehicle liability insurance; Insurance
Body Date Action Description Com Leg Involved
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House 19970410 Introduced, read first time, 26 HLCI
referred to Committee
View additional legislative information at the LPITS web site.
TO AMEND SECTION 38-73-1420, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES, SO AS TO DELETE THE CURRENT PROVISIONS OF THE SECTION AND PROVIDE, AMONG OTHER THINGS, THAT BEGINNING APRIL 30, 1998 THE BOARD OF GOVERNORS OF THE FACILITY, UTILIZING DATA PROVIDED TO IT BY THE INSURANCE DEPARTMENT'S STATE RATING AND STATISTICAL DIVISION AND BY ANY CONTRACT STATISTICAL AGENT FOR THE FACILITY, ANNUALLY MUST FILE A PURE LOSS COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE, THAT THE PURE LOSS COMPONENT MUST BE DEVELOPED AS AN AVERAGE FOR ALL INSURED VEHICLES REGISTERED IN SOUTH CAROLINA, AND THAT UPON THE APPROVAL OF THAT PURE LOSS COMPONENT BY THE ADMINISTRATIVE LAW JUDGE DIVISION PURSUANT TO THE PROVISIONS OF SECTION 38-73-1370, BUT IN NO EVENT LATER THAN JUNE THIRTIETH, THE BOARD OF GOVERNORS ANNUALLY MUST FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE; TO AMEND SECTION 38-77-590, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE REINSURANCE FACILITY, AND DESIGNATED PRODUCERS, SO AS TO ADD PROVISIONS WHICH PROVIDE, AMONG OTHER THINGS, FOR THE REDESIGNATION OF CERTAIN TERMINATED PRODUCERS WITHOUT HAVING TO MEET CERTAIN SPECIFIED REQUIREMENTS OF THIS SECTION; AND TO AMEND SECTION 38-77-950, AS AMENDED, RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY AN AUTOMOBILE INSURER, SO AS TO PROVIDE THAT PRIVATE PASSENGER AUTOMOBILE LIABILITY INSURANCE PREMIUMS WRITTEN THROUGH A PRODUCER CONTRACTING BY CERTAIN PROVISIONS OF SECTION 38-77-590 MUST NOT COUNT TOWARD THAT THIRTY-FIVE PERCENT CESSION LIMITATION DURING THE FIRST TWENTY-FOUR MONTHS THAT THAT PRODUCER IS UNDER CONTRACT.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 38-73-1420 of the 1976 Code, as amended by Section 783 of Act 181 of 1993, is further amended to read:
"Section 38-73-1420. After June 30, 1989, the Board of Governors of the South Carolina Reinsurance Facility shall file an expense component for private passenger automobile insurance rate or premium charges after the rating organization with the largest number of members or subscribers has filed a pure loss component for private passenger automobile insurance with the director or his designee. Upon the approval of such component by the director or his designee, those automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, shall utilize these final rate or premium charges. Automobile insurers designated pursuant to Section 38-77-590(A) are not required to use those same final rates or premium charges for risks written through their agents not appointed pursuant to Section 38-77-590. Beginning April 30, 1998, the Board of Governors of the South Carolina Reinsurance Facility, utilizing data provided to it by the department's State Rating and Statistical Division and by any contract statistical agent for the Reinsurance Facility, annually must file a pure loss component for private passenger automobile liability insurance. The pure loss component must be developed as an average for all insured vehicles registered within this State. Upon approval of that pure loss component by the Administrative Law Judge Division pursuant to the provisions of Section 38-73-1370, but in no event later than June thirtieth, the Board of Governors annually must file an expense component for private passenger automobile liability insurance. Upon approval of that expense component by the Administrative Law Judge Division pursuant to the provisions of Section 38-73-1380, insurers designated pursuant to Section 38-77-950(a) must utilize the pure loss component and expense component for all risks written through them by producers designated before June 7, 1985 pursuant to Section 38-77-590(a) or after June 7, 1985, pursuant to Section 38-77-590(c). However, any increase in designated producer rates over the rates resulting from the calculation formula in effect before April 30, 1998, must be phased-in over a three-year period. "
SECTION 2. Section 38-77-590 of the 1976 Code, as last amended by Sections 821 through 825 of Act 181 of 1993, is further amended by adding:
"(i) Notwithstanding any other provision of this section or other provision of law, any producer designated by a chief insurance commissioner before June 7, 1985 and any producer designated by the Governing Board of the Reinsurance Facility after June 7, 1985 who enters into an agreement after the effective date of this subsection (i) to write private passenger automobile liability insurance on behalf of an insurer not designated pursuant to the provisions of Section 38-77-590(a) may, if terminated by that insurer within the first thirty-six months of that agreement, be redesignated by the Governing Board of the Reinsurance Facility without meeting the requirements of subsection (c) of this section."
SECTION 3. Section 38-77-950 of the 1976 Code, as last amended by Section 828 of Act 181 of 1993, is further amended to read:
"Section 38-77-950. It is the intent of this chapter that the facility must not be excessively nor unreasonably utilized by automobile insurers for unfairly competitive purposes or for purposes of unfairly discriminating against certain classes or types of automobile insurance risks having the same or similar objective risk characteristics as other risks in the same class under the rating plan for the classification of risks promulgated by the department, nor for the purpose of discriminating against the risks or risks in certain rating territories. The director or his designee shall prohibit unreasonable or excessive utilization of the facility. A prima facie case of excessive or unreasonable utilization is established upon a showing that an automobile insurance insurer or a group of insurers under the same management has ceded or is about to cede more than thirty-five percent of total direct cedeable written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement of the insurer or group. However, private passenger automobile liability insurance premiums written through a producer contracting by the provisions of Section 38-77-590(i) must not count toward that thirty-five percent cession limitation during the first twenty-four months that that producer is under contract. Upon the written request of the policyholder, insurance companies doing business in this State shall give written notice to the policyholder informing him whether or not he and a driver under the policy is are in the facility. Insurers shall give written notice to the policyholder of a risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e).
Total direct cedeable written premiums as used in this section do not include premiums attributable to risks ceded to the facility that do not qualify for the safe driver discount in Section 38-73-760(e) for twenty-four months following October 1, 1993."
SECTION 4. Except as may otherwise specifically be provided in this act, this act takes effect upon approval by the Governor.